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Business as government: Capitalizing on disaster in post-earthquake Haiti

Sign from a Port-au-Prince protest in October 2011, declaring “IHRC = Occupation. Long live a sovereign Haiti.” Photo: Ansel Herz.

February 29, 2012
by Deepa Panchang and Beverly Bell

“I am optimistic that in 18 months, yes, we will be autonomous in our decisions. But right now I have to assume... that we are not.”[i] With these words, Haiti’s Prime Minister Jean-Max Bellerive watched a swath of his government’s decision-making power shift into foreign hands in early 2010.

It's one thing to privatize government services. Since the earthquake, US firms have actually been involved in privatizing governance – in fact, the governance of another country. Corporations with little to no knowledge of Haiti were brought in as volunteers to plan, kick off, and even staff the team with the single greatest operational influence over shaping the reconstruction model for the year after the quake, the Interim Haiti Reconstruction Commission (IHRC).

The IHRC was created by the Haitian parliament in April 2010 to direct post-earthquake reconstruction. Its mandate was to oversee rebuilding efforts through the $11 billion in pledges of international aid, including approving policies, projects, and budgeting. The World Bank was to manage the money. In creating and investing this body with its broad power, Parliament conducted a constitutional coup on April 15. Whereas the constitution mandates shared governance by an executive, a parliament, and a judiciary, the IHRC shifted it to the executive and the international community. The Parliament voted to give the IHRC the power to do, effectively, whatever it wanted. The only oversight measure left the Haitian government was veto power by the president.[ii]

Given the corporate philosophies of the firms that designed it, the resultant features of the IHRC were hardly surprising. The IHRC’s 26 board members were elected by no one and were accountable to no one. Half were foreign, including representatives of other governments, multilateral financial institutions, and non-governmental organizations. An international development consultant contracted by the IHRC, speaking with the Haiti Support Group, said, “Look, you have to realize the IHRC was not intended to work as a structure or entity for Haiti or Haitians. It was simply designed as a vehicle for donors to funnel multinationals’ and NGOs’ project contracts.”[iii]

McKinsey and Company, a US management consulting firm, was one of the firms that came in to help "design" and "launch" the IHRC.[iv] A background interview with an official very close to the process showed the Haitian government at the beck and call of McKinsey as it structured the commission and determined membership and decision-making processes. (All these aspects later received vehement criticism from Haitian civil society.) At the very first meeting, according to official minutes, it was McKinsey’s lead consultants who “made a presentation to the Board regarding the mission, mandate, structure, and operations of the IHRC.”[v] The consultants sat in on subsequent meetings as well.[vi]

McKinsey & Co. performed its services pro bono. Whether paid or not, the post was a lucrative one; it well-positioned the firm both to influence future contracts and to shape a climate favorable to business. A 2010 World Economic Forum document explicitly stated that “McKinsey helps coordinate with partners to channel interest from the private sector and connect would-be donors and investors to opportunities in Haiti.”[vii]

McKinsey was a natural choice for the job because of its former managing director’s long-time personal and political ties to Bill Clinton, who serves as UN Special Envoy to Haiti and was co-chair of the IHRC board. The firm was also a prime candidate because it advances the paradigm of ‘government as business,’ serving many governments around the world.[viii] As one example, McKinsey played a key role in developing the framework for the reconstruction commissions in Indonesia and Sri Lanka after the Indian Ocean tsunami which, as with the IHRC, involved infusing foreign private sector individuals into policy-making. This was another case in which the local population was excluded from having a say in its own future following another disaster; civil society groups denounced the Rehabilitation and Reconstruction Agency (BRR in Bahasa) for being extremely centralized and discounting civil society voices.[ix]

McKinsey came under fire again after Hurricane Katrina and the flood of New Orleans for work it had done prior to the storm. McKinsey helped major insurance companies develop tactics that stalled court proceedings and delayed payments that, in practice, allowed them to avoid paying out claims to their clients who suffered in natural disasters or accidents. Lawsuits against insurance companies asserted that McKinsey’s pre-Katrina advice, particularly to Allstate, effectively helped insurers cheat their customers.[x]

Another US firm, Korn/Ferry International, came on board to head-hunt the executive director of the IHRC. This was to replace the initial staffing that had been provided by the Clinton Foundation, International Development Bank, and the governments of the US and Canada.[xi] Korn/Ferry circulated a job announcement, in English, through politically connected circles in the US and Haiti, as though it were hiring for any profit-oriented business instead of for a team that was making major decisions in the name of a nation and its well-being. The announcement noted that, “Leadership experience in highly efficient and structured organizations, such as the military, is an advantage.”

Korn/Ferry provides recruitment services for both corporate and government positions, and keeps its finger on the pulse of the increasing overlap of the two. It even published a report encouraging companies to hire leadership with government and policy backgrounds and vice versa, in what it called a "new marriage between business and government.”[xii]

Vesting foreign enterprises with political power is fundamentally anti-democratic. If US firms’ performance in post-earthquake governance is any example, it is a frightening indicator of what might emerge with even greater participation in decision-making, as mandated by the redevelopment blueprint published in March 2010 by the Haitian government and international community.

As ineffectual as the Haitian government may be, its functions can’t be outsourced. Haiti needs a government with responsibility to the citizenry who elected it and the ability to protect their rights. The pursuits of foreign firms – making governance decisions about rebuilding, paving the way for other firms’ Haitian debuts, racking up humanitarian clout – have been at the expense of Haitians still struggling for basic needs and democratic power.

The public good requires a public sector which can guarantee health, education, adequate food, water, housing, employment, agriculture, and civil liberties. It requires more than unaccountable foreign agencies and private business that can and do pull out when they like.

Deepa Panchang is the Education and Outreach Coordinator for Other Worlds. She has worked in advocacy for human rights in Haiti since the 2010 earthquake.

Beverly Bell has worked with Haitian social movements for over 30 years. She is also author of the book Walking on Fire: Haitian Women's Stories of Survival and Resistance and is working on the forthcoming book, Fault Lines: Views across Haiti’s New Divide. She coordinates Other Worlds, which promotes social and economic alternatives. She is also associate fellow of the Institute for Policy Studies.

You can access all of Other Worlds’ past articles regarding post-earthquake Haiti here.
Copyleft Other Worlds. You may reprint this article in whole or in part. Please credit any text or original research you use to Deepa Panchang and Beverly Bell, Other Worlds.

[i] Martin Kaste, “After Quake In Haiti, Who’s The Boss?” NPR, March 31, 2010, http://www.npr.org/templates/story/story.php?storyId=125328026
[ii] Order by Réné Préval, President (Republic of Haiti, 2010), en.cirh.ht/files/pdf/ihrc_decree_20100421.pdf.
[iii] Haiti Support Group, "Deconstructing the IHRC's Reconstruction: Beyond Relief, Beyond Belief," The Haiti Support Group Briefing, no. 69, January 2012, 1.
[iv] Mary Bridges, et al., Innovations in Corporate Global Citizenship: Responding to the Haiti Earthquake, (World Economic Forum, July 2010), 16-17, www3.weforum.org/docs/WEF_HaitiResponse_Report_2010.pdf.
[v] “Minutes of the Board Meeting of the Interim Haiti Recovery Commission (IHRC),” Interim Haiti Recovery Commission, Hotel Karibe, Pétionville, Haiti, June 17, 2010, en.cirh.ht/files/pdf/ihrc_board_minutes_june_17_2010.pdf.
[vi] Interim Haiti Recovery Commission, “IHRC Board Meeting Minutes,” accessed October 31, 2011, http://en.cirh.ht/board-meeting-minutes.html.
[vii] “Innovations in Corporate Global Citizenship: Responding to the Haiti Earthquake,” World Economic Forum, July 2010, www3.weforum.org/docs/WEF_HaitiResponse_Report_2010.pdf.
[viii] Ian Davis, Government as Business (The McKinsey Quarterly, October 2007), http://www.mckinsey.com/locations/UK_Ireland/~/media/Reports/UKI/Ian_Dav....
[ix] Risma Umar et al., Tsunami Aftermath: Violations of Women’s Human Rights in Nanggroe Aceh Darussalam, Indonesia (Asia Pacific Forum on Women, Law, and Development, 2006), www.apwld.org/pdf/tsumai_vwhr.pdf.
[x] David Dietz and Darrell Preston, “The Insurance Hoax,” Bloomberg, September 2007, http://www.bloomberg.com/apps/news?pid=nw&pname=mm_0907_story1.html.
[xi] “Interim Haiti Recovery Commission Announces Over $1. 6 Billion in New Project Proposals, Outlines Priorities,” PR Newswire online, August 17, 2010, http://www.prnewswire.com/news-releases/interim-haiti-recovery-commissio....
[xii] Nels Olsen, A New Breed of Director Emerges as Public Policy Enters the Boardroom (Korn/Ferry Institute 2009), 7, http://www.kornferryinstitute.com/files/pdf1/ANewBreedofDirector_whtppr_....

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